(New York) — Conspiracy theorist Alex Jones accused The Onion and Sandy Hook Elementary School families of “collusive bidding” and asked a bankruptcy court judge to halt the sale of his Infowars platform.
Jones, who defamed the Sandy Hook families by calling the 2012 massacre a hoax and the parents of the 20 first graders actors, called The Onion’s winning $1.75 million bid “sheer nonsense” because it’s half of what the losing bidder offered.
The Onion began a “systematic effort to confuse Mr. Jones’s personal public following with messages espousing gun control in a manner such that Mr Jones’s personal public following would be utterly confused and misled,” Jones said in an overnight court filing.
His request follows a similar push for an injunction by First United American Companies, which is affiliated with Jones through the sale of dietary supplements.
The plaintiffs nor the trustee immediately responded to Jones but the trustee has previously called the auction result legitimate and asked the court for approval.
(NEW YORK) — President-elect Donald Trump sharply criticized the rising price of groceries throughout his campaign, even delivering an address outside his New Jersey home in August alongside a table covered with cereal boxes, coffee grounds and ketchup.
A wave of consumer discontent appears to have helped lift him back into the Oval Office, but Trump now faces the task of how to ease voters’ frustration.
Food inflation soared to a peak of more than 10% in 2022, but price increases have slowed to about 2%, U.S. Bureau of Labor Statistics data shows.
Still, the yearslong bout of rapid inflation has sent food prices soaring more than 25% since President Joe Biden took office.
Typically, prices do not fall across the board unless the economy slows or even tips into recession, which would reduce consumer demand but also impose economic hardship, some economists told ABC News.
Still, Trump could enact policies that may slow the rise of grocery prices, or even lower the cost of some household staples, economists added.
“Prices on different items absolutely could come down,” Michael Faulkender, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, told ABC News.
In response to ABC News’ request for comment, the Trump transition team said in a statement that Trump intends to fulfill the commitments he made during the campaign. But the transition team did not specifically address the issue of grocery prices.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver.” Karoline Leavitt, a spokesperson for the transition team, told ABC News.
Increase oil production
On the campaign trail, Trump often responded to concern about prices with a three-word mantra: “Drill, baby, drill.”
Trump, who has downplayed human-caused climate change, vowed to bolster the oil and gas industry by easing regulation and expanding output.
In theory, increased oil production could lower food prices since gas makes up a key source of costs throughout the supply chain, whether a firm is growing crops or transporting them to a seller, economists said.
“Energy is a big input cost for food,” David Andolfatto, an economist at the University of Miami, told ABC News. “That should put downward pressure on food prices.”
While such a move could prove beneficial, increased oil output under President Joe Biden coincided with the surge of inflation in recent years. Since oil is sold on a global market, a surge in domestic production may not lower prices for U.S. consumers as much as some may expect.
The U.S. set a record for crude oil production in 2023, averaging 12.9 million barrels per day, according to the U.S. Energy Information Administration, a federal agency.
A further uptick in oil production risks accelerating the nation’s carbon emissions and worsening the impact of climate change, which would carry costs down the road, Luis Cabral, a professor of economics at New York University, told ABC News.
“We can’t simply look at the benefits,” Cabral said, acknowledging the potential for lower food prices. “There are also important costs in terms of emissions and climate change.”
Bolster antitrust enforcement
To address high food prices, the Trump administration could crack down on market concentration, a term economists use to describe the dominance of a given industry by a handful of firms, some experts said.
They pointed to the market power of large corporations as a cause of rapid price increases, saying companies use their outsized role in the market to raise prices without fear of a competitor offering a comparable product at a more affordable price.
“Whenever there are fewer players in an industry, prices tend to be higher,” Cabral said. “Supermarkets aren’t an exception.”
Grocery store profit margins surged in 2021 and rose even higher two years later, even after price increases had begun to cool, a Federal Trade Commission study in March showed.
In February, the Federal Trade Commission sued to block the merger of supermarket chains Kroger and Albertsons, which would amount to the largest supermarket merger in U.S. history. The proceedings are ongoing, and will likely stretch into the Trump administration.
Some economists cast doubt over the potential benefits of antitrust, saying the recent bout of inflation coincided with an uptick in production costs during the pandemic. “It’s hard to argue that it’s therefore some kind of profiteering,” Faulkender said.
Price-gouging ban
During the campaign, Vice President Kamala Harris proposed a federal ban on price gouging for food and groceries.
The plan could resemble price-gouging bans in place in 37 states, which prohibit a sudden spike in prices for scarce goods, the Harris campaign said. Those bans prohibit companies from exploiting a sudden imbalance between supply and demand by significantly hiking prices.
While Trump may be reluctant to adopt a policy put forward by his proponent, he could advance a price-gouging ban as a means of preventing acute price increases for specific goods.
For instance, egg prices have skyrocketed 30% over the year ending in October, U.S. Bureau of Statistics data on Wednesday showed. The spike owed primarily to an avian flu outbreak that has decimated supply. Last year, egg prices climbed more than 60% in response to a similar avian flu outbreak.
Economists who spoke to ABC News differed on the effectiveness of a potential price-gouging ban.
Some economists dismissed the policy as a flawed solution, since state-level bans usually get triggered only in the case of emergencies and, even then, often lack clarity about the type of company behavior that constitutes price-gouging.
“I don’t think a federal price-gouging ban would help at all,” Cabral said.
Andolfatto, of the University of Miami, said a price-gouging ban could lower food prices if it barred rapid price increases under some circumstances. However, those benefits may be outweighed by the downside, since such a ban could override the market signal delivered by prices, which help direct the distribution of goods to places where they are in short supply.
“These types of interventions have unintended consequences,” Andolfatto said.
(NEW YORK) — President-elect Donald Trump sharply criticized the rising price of groceries throughout his campaign, even delivering an address outside his New Jersey home in August alongside a table covered with cereal boxes, coffee grounds and ketchup.
A wave of consumer discontent appears to have helped lift him back into the Oval Office, but Trump now faces the task of how to ease voters’ frustration.
Food inflation soared to a peak of more than 10% in 2022, but price increases have slowed to about 2%, U.S. Bureau of Labor Statistics data shows.
Still, the yearslong bout of rapid inflation has sent food prices soaring more than 25% since President Joe Biden took office.
Typically, prices do not fall across the board unless the economy slows or even tips into recession, which would reduce consumer demand but also impose economic hardship, some economists told ABC News.
Still, Trump could enact policies that may slow the rise of grocery prices, or even lower the cost of some household staples, economists added.
“Prices on different items absolutely could come down,” Michael Faulkender, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, told ABC News.
In response to ABC News’ request for comment, the Trump transition team said in a statement that Trump intends to fulfill the commitments he made during the campaign. But the transition team did not specifically address the issue of grocery prices.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver.” Karoline Leavitt, a spokesperson for the transition team, told ABC News.
Increase oil production
On the campaign trail, Trump often responded to concern about prices with a three-word mantra: “Drill, baby, drill.”
Trump, who has downplayed human-caused climate change, vowed to bolster the oil and gas industry by easing regulation and expanding output.
In theory, increased oil production could lower food prices since gas makes up a key source of costs throughout the supply chain, whether a firm is growing crops or transporting them to a seller, economists said.
“Energy is a big input cost for food,” David Andolfatto, an economist at the University of Miami, told ABC News. “That should put downward pressure on food prices.”
While such a move could prove beneficial, increased oil output under President Joe Biden coincided with the surge of inflation in recent years. Since oil is sold on a global market, a surge in domestic production may not lower prices for U.S. consumers as much as some may expect.
The U.S. set a record for crude oil production in 2023, averaging 12.9 million barrels per day, according to the U.S. Energy Information Administration, a federal agency.
A further uptick in oil production risks accelerating the nation’s carbon emissions and worsening the impact of climate change, which would carry costs down the road, Luis Cabral, a professor of economics at New York University, told ABC News.
“We can’t simply look at the benefits,” Cabral said, acknowledging the potential for lower food prices. “There are also important costs in terms of emissions and climate change.”
Bolster antitrust enforcement
To address high food prices, the Trump administration could crack down on market concentration, a term economists use to describe the dominance of a given industry by a handful of firms, some experts said.
They pointed to the market power of large corporations as a cause of rapid price increases, saying companies use their outsized role in the market to raise prices without fear of a competitor offering a comparable product at a more affordable price.
“Whenever there are fewer players in an industry, prices tend to be higher,” Cabral said. “Supermarkets aren’t an exception.”
Grocery store profit margins surged in 2021 and rose even higher two years later, even after price increases had begun to cool, a Federal Trade Commission study in March showed.
In February, the Federal Trade Commission sued to block the merger of supermarket chains Kroger and Albertsons, which would amount to the largest supermarket merger in U.S. history. The proceedings are ongoing, and will likely stretch into the Trump administration.
Some economists cast doubt over the potential benefits of antitrust, saying the recent bout of inflation coincided with an uptick in production costs during the pandemic. “It’s hard to argue that it’s therefore some kind of profiteering,” Faulkender said.
Price-gouging ban
During the campaign, Vice President Kamala Harris proposed a federal ban on price gouging for food and groceries.
The plan could resemble price-gouging bans in place in 37 states, which prohibit a sudden spike in prices for scarce goods, the Harris campaign said. Those bans prohibit companies from exploiting a sudden imbalance between supply and demand by significantly hiking prices.
While Trump may be reluctant to adopt a policy put forward by his proponent, he could advance a price-gouging ban as a means of preventing acute price increases for specific goods.
For instance, egg prices have skyrocketed 30% over the year ending in October, U.S. Bureau of Statistics data on Wednesday showed. The spike owed primarily to an avian flu outbreak that has decimated supply. Last year, egg prices climbed more than 60% in response to a similar avian flu outbreak.
Economists who spoke to ABC News differed on the effectiveness of a potential price-gouging ban.
Some economists dismissed the policy as a flawed solution, since state-level bans usually get triggered only in the case of emergencies and, even then, often lack clarity about the type of company behavior that constitutes price-gouging.
“I don’t think a federal price-gouging ban would help at all,” Cabral said.
Andolfatto, of the University of Miami, said a price-gouging ban could lower food prices if it barred rapid price increases under some circumstances. However, those benefits may be outweighed by the downside, since such a ban could override the market signal delivered by prices, which help direct the distribution of goods to places where they are in short supply.
“These types of interventions have unintended consequences,” Andolfatto said.
(NEW YORK) — Americans’ credit card debt has hit a record high, the Federal Reserve of New York said in a report released this week.
Credit card debt climbed $24 billion over a three-month stretch ending in September, soaring to a level 8% higher than where it stood a year ago, the report said.
Debt holders may seek solace in a string of recent interest rate cuts at the Federal Reserve, which typically reduce borrowing rates for credit cards. But credit card interest rates have proven stubborn, leaving borrowers saddled with near record-high average payments even after the rate cuts.
The average credit card interest rate stands at 20.35%, just slightly below a record-high of 20.79% attained in August before the Fed began cutting rates, Bankrate data showed.
Credit card interest rates remain high, in part, because the Fed’s benchmark rate still stands at a historically high level, experts told ABC News. The incremental cuts in recent months have only partially reversed the previous escalation of rates meant to fight the nation’s worst bout of inflation in decades.
That high baseline rate has collided with a rise in the average credit card margin, or the borrowing cost that companies place on top of the benchmark rate to weather default risk, cover overhead costs and recoup profits, experts added.
“Credit card rates are high, and they’re staying high,” Ted Rossman, a senior industry analyst at Bankrate, told ABC News.
To set credit card interest rates, the industry relies on what’s called a “prime rate,” which is the rate paid by the most creditworthy borrowers. That rate is calculated by adding three percentage points to the Fed’s benchmark interest rate. The prime rate, which acts as a baseline for credit card rates faced by all borrowers, currently stands at 7.75%.
The prime rate remains historically high because the Fed has, so far, taken just a few, incremental steps toward dialing back a yearslong series of rate hikes. In recent months, the Fed has cut interest rates by three-quarters of a percentage point, but such relief offers little savings for credit card borrowers, experts said.
Policymakers at the Fed forecast another quarter-point cut next month, and cuts next year totaling one percentage point, but that will still leave interest rates at an elevated level, according to projections released in September.
“I don’t think the Fed wants a rapid fall in rates,” John Sedunov, a finance professor at Villanova University’s School of Business, told ABC News. “It wants to gradually ease rates back.”
The persistence of high interest rates has coincided with a rise in the margin charged by credit companies over and above the prime rate, some experts said.
The average margin charged by credit card firms reached an all-time high of 14.3% last year, according to a U.S. Consumer Financial Protection Bureau analysis of Federal Reserve data. The margin increased sharply from a rate of 9.3% in 2013, the CFPB found.
The rise in credit card delinquency owes, in part, to a decline in personal savings, as Americans have spent down pandemic-era economic stimulus and turned to credit card loans, Sedunov said.
“Banks may view the amount of risk in credit card lending as higher than it was a few years ago, even though the Fed is lowering rates,” Sedunov said.
Growth in credit card margins also stems from old-fashioned profit-taking on the part of credit card companies, some experts said.
Credit card profitability has increased over the past five years, and has outpaced the profitability of other business drivers at the companies that offer them, according to the CFPB report.
“Banks, especially large banks, are trying to make as much profit as they can,” Fariz Huseynov, a professor of corporate finance at North Dakota State University, told ABC News.
Credit card rates may gradually decline in the coming months, since the Fed plans to make additional interest rate cuts, experts said. However, consumers should expect a gradual decrease that could be tempered by a bout of resurgent inflation or higher credit card delinquency rates, they added.
“If you’re in credit card debt, my advice is: Don’t make the hole even deeper, and shift to a debit card or cash if you can,” Rossman said, pointing to the likely persistence of high credit card rates.
“The point is you have to do something,” Rossman added.
(WASHINGTON) — Social media platform TikTok is hurtling toward a U.S. ban that could upend its business and frustrate more than 150 million American users — unless President-elect Donald Trump finds a way to reverse the policy.
Trump, who boasts 14 million followers on TikTok, voiced opposition to the ban earlier this year. The policy, which orders TikTok to find a U.S. parent company or face a ban, is set to take effect on Jan. 19, a day before Trump’s inauguration.
An effort to eliminate the ban may present formidable political challenges and legal hurdles, experts told ABC News. The outcome could depend on support from an array of major institutions ranging from Congress and the Supreme Court to tech giants like Google and Oracle, they added.
The China-owned app has faced growing scrutiny from government officials over fears that user data could fall into the possession of the Chinese government and the app could be weaponized by China to spread misinformation.
There is little evidence that TikTok has shared U.S. user data with the Chinese government or that the Chinese government has asked the app to do so, cybersecurity experts previously told ABC News.
TikTok did not immediately respond to ABC News’ request for comment. Neither did Trump’s transition team.
The president is expected to try to stop the ban of TikTok after he takes office, The Washington Post reported on Tuesday, citing people familiar with his views on the matter.
Here’s what to know about the different ways that Trump could try to stop the TikTok ban, according to experts:
Push Congress to repeal the TikTok ban
The most straightforward way to reverse the policy would be a repeal of the law that enacted the ban in the first place, experts told ABC News.
A repeal would require passage in both houses of Congress, landing the measure on Trump’s desk for his signature.
“The easiest way is to ask Congress to reverse the ban,” Anupam Chander, a professor of law and technology at Georgetown University, told ABC News. But, he added, it isn’t as easy as it sounds.
Congress voted in favor of the ban only seven months ago. In the House of Representatives, the ban passed by an overwhelming margin of 352-65. In the Senate, 79 members voted in favor of the measure, while 18 opposed and 3 abstained.
A repeal effort carries political risks for Trump, since it could be perceived as conciliatory toward China, in contrast with the adversarial tone voiced by Trump on the campaign trail, James Lewis, a data security expert at the Center for Strategic and International Studies, told ABC News.
“It’s a political problem,” Lewis said, noting that Trump could soften potential backlash by seeking a reform of the law rather than an outright repeal.
Trump may not need Congress to repeal the ban. A lawsuit against the ban brought by TikTok on First Amendment grounds currently stands before a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit.
Experts who spoke to ABC News said they expect the court to rule against TikTok, but the company could then appeal, potentially sending the case to the Supreme Court before the ban takes effect. The Supreme Court may determine that the legal challenge holds sufficient merit to delay implementation of the ban, leading ultimately to a rejection of the law.
“The Supreme Court may want a crack at this,” Alan Rozenshtein, a law professor at the University of Minnesota who focuses on the First Amendment, told ABC News.
Refuse to enforce the TikTok ban
Instead of repealing the law or counting on court intervention, Trump could try to prevent the Justice Department from enforcing the measure, experts said.
The law orders distributors like Apple and Google to stop offering the social media platform in their app stores, and it requires cloud service providers like Oracle to withhold the infrastructure necessary for TikTok to operate.
Companies that violate the law risk a penalty of $5,000 for each user who accesses TikTok. “That adds up,” Rozenshtein said.
In theory, Trump’s Justice Department could opt against enforcement of the law, reassuring the likes of Apple and Oracle that the companies would not face prosecution in the event of a violation, experts said.
Along similar lines, the Trump administration could take up an interpretation of the ban that affords it wide latitude in finding that TikTok has complied with a requirement that it divest from parent company ByteDance, experts said.
In other words, even if TikTok has made little effort to comply with the law, the Trump administration could attempt a reading of the measure that finds the company has met the threshold necessary to avoid a ban, Rozenshtein said.
If Trump opts against enforcement, the move could still prove insufficient. Companies like Apple and Oracle may decide to comply with the ban anyway, since they could face legal risk if the Trump administration reverses its approach, Rozenshtein added.
“Trump is mercurial,” Rozenshtein said. “If you are Apple’s general counsel, do you really want this hanging over you?”
Help TikTok find a U.S. buyer
Finally, Trump could try to find a U.S. buyer for TikTok, allowing the platform to avoid a ban. This approach may appeal to Trump’s self-image as a business dealmaker, but time is running short for such a significant business transaction and TikTok has shown little appetite for it, experts said.
The law allows for a 90-day extension of the deadline for a TikTok sale, as long as the company is advancing toward an agreement. Under such a scenario, the deadline would move back to April, providing Trump with additional time.
“It’s possible that he’ll try to force TikTok to come to some kind of deal with American buyers,” Lewis said. “It’s not likely. TikTok will hold out as long as they can.”
China has signaled opposition to the sale of TikTok to a U.S. company, The Wall Street Journal reported in March.
Alternatively, Trump could seek a compromise measure in Congress that affords him additional time and wider latitude to establish a U.S.-based operation for TikTok, experts said. Or the Trump administration could offer up an interpretation of the law that gives it space to strike a compromise with TikTok.
TikTok previously proposed a solution called “Project Texas,” in which the company would keep all data on U.S. users within the country through a partnership with Oracle. When TikTok CEO Shou Chew testified before Congress last year, several members raised concern about a potential lack of third-party oversight in such an arrangement.
Trump could seek to assuage the concerns of members of Congress while reaching terms satisfactory to TikTok, Chander said.
“Trump may be able to do things that reassure the American people that the app is safe, and that it is bringing a lot of the programming here to U.S. soil,” Chander said.
(WASHINGTON) — The U.S. government is set to release new inflation data on Wednesday, offering a fresh look at price increases little more than a week after the issue appeared to help former President Donald Trump win re-election.
Inflation has cooled dramatically since a peak of 9% attained in 2022, now hovering near the Federal Reserve’s target rate of 2%.
The slowdown of price increases has coincided with robust economic growth, establishing the twin conditions necessary for the U.S. to achieve a “soft landing.”
Economists expect prices to have risen 2.6% over the year ending in October. That figure would mark a slight uptick from the annual rate of 2.4% recorded during the previous month.
Still, policymakers at the Fed forecast that inflation will inch downward toward normal levels next year, and reach the central bank’s target rate in 2026, according to projections released in September.
The Fed cut interest rates by a quarter of a percentage point last week. The move came two months after the Fed cut its benchmark interest rate a half of a percentage point, dialing back its fight against inflation since it began in 2021.
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, lower interest rates help stimulate economic activity and boost employment.
While the central bank’s concern about inflation has receded in recent months, a renewed focus on the labor market has risen to the fore. Employment has continued to grow but expansion has slowed in recent months. The unemployment rate has ticked up from 3.7% to 4.1% this year.
“We continue to be confident that with an appropriate recalibration of our policy stance, strength in the economy and labor market can be maintained with inflation moving sustainably down to 2%,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last week.
Even as inflation has slowed, that progress hasn’t reversed a leap in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have skyrocketed more than 20%.
The price hikes appeared to fuel support for Trump in last week’s election. More than two-thirds of voters say the economy is in bad shape, according to the preliminary results of an ABC News exit poll.
However, Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants could rekindle rapid price increases, some experts previously told ABC News.
When asked last week about the Fed’s potential response to Trump’s policies, Powell said the central bank would make its decisions based on how any policy changes could impact the economy.
“In the near term, the election will have no effects on our policy decisions,” Powell said on Thursday. “We don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy will be.”
“We don’t guess, we don’t speculate and we don’t assume,” Powell added.
(NEW YORK) — Shares in Donald Trump’s social media company spiked after the president-elect again vowed not to sell his stake in the parent company of Truth Social and called for an investigation into “market manipulators or short sellers.”
Trump Media’s stock price increased by nearly 16 percent to $32 per share on Friday, as investors reacted to the news.
In interviews with ABC News before the election, some shareholders expressed optimism about the company’s future if Trump won the election, in large part due to his potential ability to investigate and stop so-called “naked short sellers,” who they blamed for the company’s lackluster stock price.
Earlier this year, Trump Media’s CEO Devin Nunes called for Nasdaq to investigate whether the company’s stock price was manipulated by short sellers betting against the company without owning or borrowing shares.
“I’m very happy he’s the president and think he’ll do something about the short selling when he gets into office,” Todd Schlanger, a shareholder from West Palm Beach, told ABC News.
“The system seems kind of rigged,” Todd Schlanger, a shareholder from West Palm Beach, told ABC News earlier this year. “Once he becomes president, I think he’s going to fire the head of the SEC, and I think that’s going to make a big change for the company and for all companies.”
Shares in the company — which some analysts saw as a bellwether for Trump’s electoral odds — have surged since late September when the stock traded as low as $12. As Trump’s odds of winning the election improved, the stock’s value tripled in October, trading at more than $50 per share.
But the company’s long-term success remains uncertain, with the company losing more than $19 million during the last quarter while bringing in only $1 million in revenue, according to a recent SEC filing.
According to Similarweb, a data tracking site, the site only attracts 3.7 million unique monthly visitors, compared to rival X’s 461.4M monthly visitors.
As Trump heads into office and the company’s share price continues to surge, his 57 percent stake in the company is worth nearly $4 billion.
(NEW YORK) — A surging stock market, low unemployment and robust growth — by just about every measure, the economy stood poised to deliver victory for Vice President Kamala Harris.
The exception, of course, was inflation, and it appears to have overshadowed other indicators. More than two-thirds of voters say the economy is in bad shape, according to the preliminary results of an ABC News exit poll.
Inflation likely shaped negative voter perceptions of the economy and helped fuel anger toward the party in power, just as it has done across the globe since the pandemic unleashed a wave of rapid price increases, experts told ABC News.
The political potency of inflation stems from the visceral, recurring sense of unease caused by high prices, experts added. That feeling leaves voters insecure about their future and desperate for a leader who can change the nation’s course.
“Inflation has a specific and special power in elections,” Chris Jackson, senior vice president of public affairs for Ipsos in the U.S., told ABC News. “It’s something people see in their face every day — every time they go to the grocery store or fill up their car.”
He added, “Inflation is present in people’s lives. It’s something they’re unhappy with and it’s something they rightly or wrongly blame on whoever is in charge.”
The pandemic set off an acute bout of inflation that impacted nearly every country across the world, when global supply chain blockages caused an imbalance between the availability of goods and the demand for them. In other words, too much money chased too few products.
Prices began to rise rapidly in the U.S. in 2021, catapulting the inflation rate to a peak of about 9% the following year. Inflation soared even higher in many other countries, including the likes of Brazil and England, where leaders faced an angry electorate.
In Brazil, where President Jair Bolsonaro cut taxes on fuel and electricity in an effort to slash prices over the months preceding an election that concluded in October 2022, the nation nevertheless replaced him with a leftwing challenger.
Earlier that year, in England, Prime Minister Liz Truss responded to the highest inflation in four decades with an economic policy centered on tax cuts and energy price controls. Her tenure in office lasted just 44 days before market reaction and political disarray led to her stepping down.
The post-pandemic pattern has exemplified a high rate of leadership change amid inflation crises around the world over the last half century, according to a study by Eurasia Group, a political risk consultancy firm. Examining 57 inflation shocks since 1970, the firm found government turnover in 58% of cases.
Further, when there was an election during or within two years of an inflation shock, it led to a change in government in roughly three out of every four instances, according to Eurasia Group.
“We’re seeing this trend on jet fuel after the pandemic,” said Robert Kahn, the managing director of global macro-geoeconomics at the New York-based Eurasia Group. “The pandemic inflation shock contributes to a sense of instability and a loss of confidence among people in their governments.”
Carola Binder, an economics professor at the University of Texas at Austin who studies the history of inflation in the U.S., characterized recent anti-incumbent sentiment in a slightly different way: “When people are experiencing inflation and suffering from it, they want to have someone or something to blame.”
Inflation has cooled dramatically over the past two years, now hovering near the Federal Reserve’s target rate of 2%. Even so, that progress hasn’t reversed a leap in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have skyrocketed more than 20%.
The potential role of inflation in the U.S. election owes to a typical lag between when inflation comes down and when consumers acclimate to new price levels, since a lower inflation rate does not mean prices have come down but rather that they have begun to increase at a slower pace, experts told ABC News.
“When inflation comes back down, the prices of many critical items remain high, especially for people who are stretched and living paycheck to paycheck,” Kahn said.
Consumers will likely acclimate to current price levels over the coming months, but voters will remain sensitive to inflation, experts said.
President-elect Donald Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants risk rekindling rapid price increases, some experts said.
When asked about whether inflation could reemerge as an important issue ahead of the next midterm elections in 2026, Jackson said: “If Republicans shoot themselves in the foot, absolutely.”
(WASHINGTON) — The Federal Reserve on Thursday will announce its latest decision on the direction of interest rates, setting the path for borrowing costs just two days after the victory of President-Elect Donald Trump.
The Fed cut its benchmark interest rate a half of a percentage point in September, dialing back its yearslong fight against inflation and delivering relief for borrowers saddled with high costs.
The Federal Open Market Committee (FOMC), a policymaking body at the Fed, has forecast further interest rate cuts.
By the end of 2024, interest rates will fall another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections further indicated.
The central bank is widely expected to cut interest rates by another quarter of a percentage point when it meets on Thursday, according to the CME FedWatch Tool, a measure of market sentiment.
In recent months, the U.S. has inched closer to a “soft landing,” in which inflation returns to normal and the economy averts a recession.
Government data released last week showed robust economic growth over a recent three-month period, alongside a continued cooldown of inflation.
U.S. hiring slowed in October, but fallout from hurricanes and labor strikes likely caused an undercount of the nation’s workers, U.S. Bureau of Labor Statistics data on Friday showed.
Since 2021, the Fed has sought to rein in inflation with elevated interest rates. Even after the Federal Reserve cut its benchmark interest in September, it still stands at a historically high level.
Inflation has cooled dramatically from a peak of about 9% in 2022, hovering right near the Federal Reserve’s target rate of 2%.
The trajectory of inflation could shift in the coming months. Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants are widely expected to raise consumer prices, experts previously told ABC News.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked previously about the 2024 election at a press conference in Washington, D.C., in December, Powell said, “We don’t think about politics.”
The election of Trump appears to have delivered a boost for the stock market. The U.S. stock market soared at the open of trading on Wednesday, just hours after Trump declared victory.
The Dow Jones Industrial Average climbed more than 1,300 points, amounting to a nearly 3% rise in the index. The S&P 500 and the tech-heavy Nasdaq each jumped more than 2%.
Shares of Tesla, the electric vehicle company headed by Trump ally Elon Musk, spiked about 14.5% in early trading on Wednesday.
(WASHINGTON) — As former President Donald Trump declared victory in the U.S. presidential election early Wednesday, shares of his media company, Trump Media & Technology, surged about 34% to about $45.49 in pre-market trading.
With U.S. markets yet to open, early indicators appeared to show Wall Street’s bullish view of a second term for Trump. As votes were still being, Dow futures were up, the U.S. dollar was strengthening and international markets were mixed.
Dow Jones Industrial Average futures had surged about 2.9% by 6 a.m. in New York, having risen briskly from the 1.7% gain they had logged when former President Donald Trump took the stage in Florida at about 2 a.m.
S&P 500 futures traded up about 2.2% early Wednesday, while futures for the tech-heavy Nasdaq market were up about 1.7%. Shares of Tesla, the electric-vehicle company headed by Trump ally Elon Musk, spiked about 14.5% in pre-market trades.
Trump owns a 57% stake in the Trump Media, which trades under the DJT ticker and is the parent of social media startup Truth Social. The company late Tuesday reported its third quarterly loss since going public in March.
Markets in the U.S. had surged on Tuesday, led by the Nasdaq’s 1.4% rise.
As Trump walked onto the stage in Florida early Wednesday, the dollar was strengthening. The U.S. Dollar Index traded up about 1.4% at 104.75, touching a level it hadn’t seen since early August. Yields on 10-year and 2-year Treasury bonds had also climbed overnight.
Trading in Asia was mixed Wednesday as international markets digested the election results. Japan’s Nikkei closed up 2.61% for the day, while Shanghai closed nearly flat, slipping just 0.09%.
Hong Kong’s Hang Seng Index fell, dropping 2.23% by the close after opening below Tuesday’s close.
The United Kingdom’s FTSE 100 Index climbed early Wednesday, rising about 1.43% moments after open. Germany’s DAX saw a similar rise, climbing about 1.3% in morning trading.
